Australia ETFs Could Find Support from Central Bank

Australia ETFs Could Find Support from Central Bank

The 25 basis point cut to the cash interest rate is the second such cut in as many months, following the RBA's decision to lower the rate to 1.25 per cent in June.

The Australian dollar led all gainers after the Reserve Bank of Australia cut interest rates, as expected, but signaled a more balanced outlook.

"We don't think the 50 basis-point reduction will be enough, and continue to expect a third cut to 0.75 percent in the fourth quarter".

"We will be closely monitoring how things evolve over coming months".

Senior analyst at IBISWorld, Jason Aravanis, said the gold price could continue to rise with the anticipation of more interest rate cuts.

The Pound Australian Dollar (GBP/AUD) exchange rate will, however, remain sensitive to political developments surrounding US-China trade discussions and the ongoing Tory leadership race.

For an owner-occupier customer with a standard variable home loan of $400,000 on principal and interest repayments, the.20% p.a. rate reduction will result in a saving of $800 each year.

"It used to be the case that if you had an unemployment rate in Australia near five per cent, you'd have a wage growth of four per cent, and inflation would be in the Reserve Bank's target band of a bit over two (per cent)", he told AAP on Wednesday.

"This is a very significant change being proposed by the government; it is more than half-a-decade off into the future and they say we've got to vote on it this week", Albanese said, according to AAP.

Lowe urged Treasurer Josh Frydenberg to lift borrowing to spend up on infrastructure while increasing fiscal and productivity measures after the first back-to-back interest rate cuts since 2012.

"The persistent downside risks to the global economy combined with subdued inflation have led to expectations of easing of monetary policy by the major central banks", Lowe acknowledged today. A Reuters survey showed economists see a chance of another cut to 0.75% by year end.

The plan, widely sought amid a slowing economy, needs the support of three independents and minor parties to become law after the main opposition Labor party said it would oppose the legislation in Australia's upper house Senate, where the government does not have a majority.

"Australian interest rates, like those in most advanced economies around the world, appear to be stuck at extraordinarily low levels with little prospect of going back to what was once considered to be normal".

AMP Capital economist Shane Oliver said he expected to see a cash rate of 0.5 per cent by February 2020.

NAB also announced a 0.19% cut to its owner occupier and investor variable rate home loans, with it's Tailored Home Loan for owner occupiers set to drop from 5.11% p.a. (5.24% p.a. comparison rate*) to 4.92% p.a. (5.05% p.a. comparison rate*) from July 12.

The return to growth suggested real estate markets in both cities were on the verge of bottoming out, preventing a further erosion in household wealth tied up in the family home, Mr Lawless said.

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